Explain and illustrate the difference between standard cost card under marginal and absorption costing.
Scenario
Alpha manufacturing company produces a single product, which is known as Sigma. Company plans to produce 10,000 units in the month of October. The product requires a single operation and the standard cost for this operation is presented as follows:
Direct materials:
2kg of A at $10 per kg
1 kg of B at $15 per kg.
Direct labour:
3 hours at $9 per hour.
Variable overhead:
3 hours at $2 per direct labour hour
Fixed production overhead cost is $120,000 and is absorbed according to the labour hour basis.
1. Explain and illustrate the difference between standard cost and standard costing.
2. Using the above data draw up a standard cost card under marginal and absorption costing.